Synopsis:

As a Business Mentor to Irish start-up enterprises, I work with Founders to help them take their business and business plans to the point where the enterprise is investor-ready. What stops Irish start-ups from achieving investment or otherwise fully commercialising their innovative idea? The author believes that the answer lies in an uneven distribution of innovation across the business. Innovation is concentrated in product development and less visible in other essential parts of the business.

4 Key Takeaways:

The successful commercialisation of innovative ideas requires an aligned strategy across key functional areas of the enterprise.

Innovation tends to be concentrated in the functional area in which the Founder is most comfortable, often product/service development.

There is often a lower quotient of innovation in other critical area of the business including finance, sales and marketing, pricing and people.

About Martin Murray:

Martin Murray is a Business Mentor working with Irish Start-Up enterprises to prepare them for investment. Martin founded, built and successfully exited Ireland's first online marketing agency. At Google, he was Head of Global Agency Sales Operations, among other senior sales management roles. Martin's early career was as an engineer working in telecoms. When he's not advising companies on how to scale successfully, he's probably walking his dog.

As a Business Mentor to Irish start-up enterprises, I work with Founders to help them take their business and business plans to the point where the enterprise is investor-ready. It's a real privilege to work with entrepreneurs and early-stage businesses. Their enthusiasm is infectious. There is no typical start-up. The promoters may be recent graduates or retirees, they may have a minimum viable product or still be at concept stage, pre-revenue or already achieving substantial sales.

The barriers to commercialisation are significant. In many cases, investment is required in order to execute on the vision of the Founders. Investors, whether they are state agencies, Venture Capital Funds, Business Angels or others will be looking for a Balanced Scorecard of characteristics and achievements to help minimise the risk associated with their investment. An experienced and compelling executive team, augmented by a sectorially-savvy Board, a credible Minimum Viable Product with unique selling points, real customers, real revenues, Intellectual Property delivering sustainable competitive advantage, all directed at a large and lucrative addressable market will reduce the time required to acquire investment.

So, where do Irish Start-Ups fall down? What stops them from achieving investment or otherwise fully commercialising their innovative idea?

Over-estimates of a product's uniqueness and under-estimates of the competition are common. The prospective customer's ability to use substitute or alternative products is rarely considered.

This starry-eyed view of one's own product leads to a second under-performance in the Business Plan - a failure to differentiate between the Total Available Market, the Served Available Market and the Target Market, which in turn leads to a gross over-estimation of the sales that can be achieved in the early years. Over-ambitious sales forecasts strain credibility and lead to long and uncertain due diligence periods when investments are being considered.

It is relatively rare to come across a Founder who has innovative insights in regard to the optimal route to market and the channels that should be used to market and sell the product. Innovation is generally concentrated in the area of product development.

We all know that Price is one of the four Ps. We also know that the pricing model is an area for innovation that can generate sustainable competitive advantage. Commonly, product pricing is an afterthought. Competitor-based pricing and freemium models are common but are not necessarily part of a coherent strategy.

Enterprises with great products, great people, customers, revenues and profits fail because they run out of cash. This is true in stable, tenured businesses but it is all the more true in start-ups. It is inspiring to see how far start-up enterprises can go and how much they can achieve with so little resources, financial and otherwise. But eventually, if you cannot maintain cashflow in the business, you go out of business.

Human resource gaps are inevitable. Many start-ups are founded by technologists or other functional experts. But a successful start-up requires a wide range of skills and experience. It takes time, and often investment, to acquire all of these resources. Non-executive and advisor positions can partially fill the gaps. When the Founders have not had experience in sales, taking on the first Business Development executive can be a daunting challenge. The demand for software developers is insatiable among start-ups.

In spite of these challenges, entrepreneurs bring to bear their ability to learn quickly, adapt and be resilient. They innovate and, against the odds, achieve success.